Investors looking to mop up handsome gains over a short run often invest in small cap funds. Though riskier in character than other fund categories, these funds have the ability to deliver appreciably higher returns due to two primary reasons. Firstly, they generate high volumes of sales in a booming market, leading to a rise in prices. In addition, research has shown that smaller firms reinvest their profits back into their business. This reassures shareholders of better performance over the long term.
Below we will share with you 5 top rated small-cap mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all small-cap funds, investors can click here to see the complete list of funds.
Franklin Small Cap Value A (FRVLX) seeks total return over the long term. The fund invests a large share of its assets in small cap companies, primarily in common stocks. These firms must have market capitalizations below $3.5 billion at the time of purchase. A maximum of 25% of its assets may be utilized to purchase. This small-cap mutual fund has a three year annualized return of 10.98%.
The fund manager is William J. Lippman and he has managed this small-cap mutual fund since 1996.
HighMark Small Cap Core Fiduciary (HSAFX) invests the majority of its assets in domestic small cap stocks which are undervalued and have good earnings potential. Not more than 20% of its assets may be used to purchase foreign securities. This small-cap mutual fund has a three year annualized return of 17.65%.
As of June 2012, this small-cap mutual fund held 170 issues, with 2.89% of its total assets invested in Pier 1 Imports, Inc.
Nuveen Small Cap Growth Opportunities A (FRMPX) seeks capital appreciation. Common stocks of companies with market capitalizations under # billion constitute the majority of its investments. A maximum of 15% of its assets are invested in non-dollar denominated foreign securities. This small-cap mutual fund has a three year annualized return of 14.12%.
The small-cap mutual fund has an expense ratio of 1.47% compared to a category average of 1.45%.
Cambiar Small Cap (CAMSX) invests a large proportion of its assets in small-cap companies. The market capitalization of these companies must be lower than $3.5 billion or within the range of the Russell 2000 Index, whichever is greater. The small-cap mutual fund has a three year annualized return of 16.63%.
Brian M. Barish is the fund manager and he has managed this small-cap mutual fund since 2004.
Lord Abbett Small-Cap Value A (LRSCX) seeks capital growth over the long term. The fund invests heavily in small-cap companies. The fund purchases common and convertible preferred stocks, convertible securities and other related instruments. The companies it invests must have market capitalizations within the range of the Russell 2000 index. This small-cap mutual fund has a three year annualized return of 12.46%.
The small-cap mutual fund has an expense ratio of 1.23% compared to a category average of 1.35%.
To view the Zacks Rank and past performance of all small-cap mutual funds, investors can click here to see the complete list of funds.
About Zacks Mutual Fund Rank
By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds.
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